The State of the tanker industry IMSF Singapore

The State of the tanker industry IMSF Singapore 17 April 2007 Erik. Ranheim@INTERTANKO. com Manager Research and Projects

The State of the tanker Industry • • • High safety Low pollution Low age High earnings – until now Surplus of tonnage building up

Pollution rate 1000 ts spilt per bn tonne miles carried 1000 ts spilt Source: ITOPF/Fearnleys bn tonne-m

Tanker accidents and trade 1000 ts spilt Bn tonne-miles trade Ship name Source: ITOPF/Fearnleys Year Pollut. ion Torrey Canyon 67 119 Amoco Cadiz 78 223 Exxon Valdez 89 37 ABT Summer 91 260 Haven 91 144 Aegean Sea 92 74 Braer 93 85 Sea Empress 96 72 Erika 99 20 Prestige 02 63 Tasman Spirit 03 30

Tanker incidents by cause 1978 -1 Q 07 Number incidents Source: Based on incidents reports from Informa

Tanker incidents by cause 2006 Source: Based on incident reports from Informa

Accidental pollution from tankers largest accidents and age Number incidents Source: Informa/INTERTANKO Average

Total losses, tankers and bulkers Number Source: Clarkson

Tanker Market

Oil price and VLCC freight rates $ per day freight rate $ per barrel oil price

VLCC spot and break-even rates $ per day freight rate

VLCC break-even rates $ per day freight rate

Oil price and freight rate $/barrel Deflated by the Consumer Price Index (USD) Source: INTERTANKO

Gasoline price at the pump $ per litre Source: INTERTANKO

World oil demand - mbd Source: IEA

Oil consumption per capita litres Source: BP Review

Oil consumption if world populations consumed oil as Americans mbd

Seaborne oil trade and Middle East oil production mbd Source: Fearnleys/IEA '000 bil tm

Seaborne oil trade and tanker fleet Source: Fearnleys/IEA

Tanker productivity – tonne-miles/dwt Source: Fearnleys/IEA

Sources of Asian oil imports Source: IEA

Sources of European oil imports - mbd Source: IEA

Sources of US oil imports - mbd Source: IEA

Increase in world oil demand in ME*, USA, China and ROW** mbd Source: IEA FSU: +0. 05 Other Asia: +0. 18 L America: +0. 09 Africa: +0. 06

World oil supply - mbd Source: IEA

Tanker Supply

Tanker contracting $ bn VLCC 13. 4 $ bn Suezmax: 5. 9 ” Aframax: 8. 8 ” Panamax: 2. 8 ” Handy: 22. 9 ” (43%) m dwt Source: INTERTANKO/Clarkson Shipyard Monitor

Tanker fleet, orderbook and phase out tankers above 30, 000 dwt m dwt 79 m dwt 133 m dwt

Phase out SH tankers above 30, 000 dwt m dwt

VLCCs max phase out , + 4. 5% trade increase, assume balanced marked end 2006 Number Fleet: 142 m dwt 487 ships Orderbook: 54 m dwt 177 ” Single hull: 42 m dwt 154 ” Average age: 9. 4 years

Suezmaxes max phase out + 4. 5% trade increase , assume balanced marked end 2006 m dwt Fleet: 52 m dwt Orderbook: 20 m dwt Single hull: 9 m dwt Average age: 9. 2 years Surplus end 2007: ” 2008: ” 2009: ” 2010: 1. 8 m dwt 2. 6 m dwt 8. 1 m dwt 3. 7 m dwt

Conversion to DH Built 10 -30 30 -52 60 -72 90 -113 120 -148 VLCCs 1970 s 3 2 0 0 5 1980 -84 8 36 9 1 0 0 54 1986 -89 11 12 0 3 3 1 30 1990 -98 2 9 1 18 2 2 34 Total 24 59 10 22 5 3 123 Total 7. 2 m dwt Conversion to FPSO/FSO/bulk carriers, heavy lift …. (1. 9 m dwt in 2006, 1. 2 m dwt so far 2007 Total

Tanker deliveries, removals, min phase-out m dwt

Tanker deliveries, removals, max phase-out m dwt

Tanker fleet double-hull development % Source: INTERTANKO

Oil import by Suezmaxes - share of double hull % Source : Fearnleys

Tanker deliveries, removals, max phase-out m dwt

Conclusion • • Strong safety performance Relatively strong demand development Very strong fleet increase Reduced earnings

Tankers 30, 000 - 59, 999 dwt min phase out, + 6 % trade increase , assume balanced marked end 2006 m dwt . . if 4. 5% increase, no new orders needed before 2012

VLCC fleet development m dwt Source: INTERTANKO Number

Aframaxes max phase out + 4. 5% trade increase , assume balanced marked end 2006 m dwt Fleet: 72 m dwt Orderbook: 28 m dwt Single hull: 14 m dwt Average age: 9. 2 years Surplus end 2007: 1. 5 m dwt ” 2008: 5. 5 m dwt ” 2009: 12. 0 m dwt 15% ” 2010: 5. 3 m dwt 6%

Aframaxes max phase out + 4. 5% trade increase , assume balanced marked end 2006 m dwt Fleet: 72 m dwt Orderbook: 28 m dwt Single hull: 14 m dwt Average age: 9. 2 years Surplus end 2007: 1. 5 m dwt ” 2008: 5. 5 m dwt ” 2009: 12. 0 m dwt 15% ” 2010: 5. 3 m dwt 6%

Tankers 30, 000 - 59, 999 dwt min phase out + 6 % trade increase , assume balanced marked end 2006 1, 253 tankers 487 orders 228 phase out 11. 1 years Number end 2007, 145 del - 45 phase out*, “ 2008, 157 “ - 17 “ “ 2009, 127 “ - 18 “ “ 2010, 56 “ - 93 “ 75 increase demand 80 “ 84 “ 90 “ = surplus 25 ships = “ 85 “ = “ 110 “ = “ 1 “

Oil import by Panamaxes - share of double hull % Source : Fearnleys

Oil import by Suezmaxes - share of double hull % Source : Fearnleys